What is cross collateral in bankruptcy?

An example of cross collateral is when you have a vehicle being financed with a credit union and also have a credit card with that same credit union. If you file for bankruptcy under chapter 13, the vehicle i now secured by the credit card debt, basically the vehicle is collateral for the credit card debt, in addition to the actual vehicles debt itself. Both debts are secured, so to keep your vehicle you have to pay both debts unless you can cram down the debt. A cram down is when you pay the value of the vehicle instead of the balance owed on the debt or debts. It depends on how long you have had the vehicle.

For more information about bankruptcy please call the Rashid Law Firm in Houston Texas.